Eicher Motors Channel Design

Group 3, SDM Section B

1. Parameters-Distribution Channel Design Decision

Market Variables 1. Market Geography- Large 2. Market Size-10% to 40% of commercial vehicle market (similar countries) Product Variables 1. Bulk and Weight- Heavy( 3.5 tonne rated payload 2. Perishability- Low 3. Unit Value- High 4. Degree of Standardization- High 5. Technical Assistance required Company Variables 1. Size-License for 12000 Vehicles per annum 2. Financial Capacity- Funding issues, cash flow problems (slump in tractors industry) 3. Managerial Expertise 4. Objective and Strategies

3. Market Density- Low 4. Market Behavior

a) Where Vehicle (Dealers) b) How- Advance Booking Intermediary Variables 1. Availability- Low 2. Cost- High 3. Services required( After sales, spare parts replacement )

2. Channel Structure for Eicher Motors

Characteristics Replacement Rate Gross Margin Adjustment Color Classification Medium Medium Low

Time of consumption
Searching time

Medium
Medium

According to Aspinwalls Characteristic of Goods Theory, we can conclude that LCVs fall under ORANGE GOODS category. Hence, medium length channel with one intermediary (Dealer) is required

Distribution Channel for LCV

Eicher Motors

Dealers

Customers

3. Attracting Suitable Channel Members

Target Dealers- Dealing in MCV and HCV Product Portfolio Enhancement Preferential allocation of new products Attractive financing opportunities Integrated Marketing Campaign to engage with customers Provide performance linked incentive schemes Better margin Invest with dealers in creating point of sale infrastructure

4. Selection of Channel Members

Credit and Financial Condition Size Sales Strength

Management Succession

Product Lines

Channel Member
Attitude Reputation

Management Ability Sales Performance

Market Coverage

4. Selection of Channel Members

Credit and Financial Condition
Evaluate financial position Stable financial condition preferred

Sales Strength
Sales capacity of intermediaries Number of sales people and quality

Reputation
Strategic Decision Store Image Adversely or Immensely affect brand

Market Coverage
Best territorial coverage Minimum overlapping

Size
Larger organization and sales volume, larger sales of manufacturer products -> Assumption Large intermediaries considered more profitable, better established, more sales people etc.

Sales Performance
Can target market share be achieved ? Detailed sales performance data of intermediaries studied

Management Succession
Continuity of management important Potential channel failure if no succession criterion in place

Management Ability
Quality of management Difficult to evaluate owing to intangibles Good sales force an indicator

Attitude
Managerial Judgment Aggressiveness, Enthusiasm and Initiative commonly observed

Product Line
Competitive Products -> not preferred Compatible Product > typically preferred Complementary Products -> preferred as offer greater product mix Quality of lines -> product line equal or better than own

Thank You!